Main Types of Charity Organizations

Many charities exist in this world. But when it comes to organizations, the area of interest is what fall under the 501(c) (3) section of the International Revenue Code. These are organizations whose earnings are tax-free. The main types include.

Private Independent Foundation

Just like its name suggests, a private foundation is operated by an individual, a business or a family. This means that the individual, company or family in question is the sole source of all the funding that goes into the organization. They are not allowed to solicit funds from the masses or any other relevant parties. The rules for running an independent foundation are stringent. For one, they are not allowed to take part in anything that is considered political. The rules also apply to the individual’s income and how much should be channeled into the foundation.

Public Supported Foundation

This is the complete opposite of the private foundation and is what most charity organizations are. These are charities that rely on funding from all and any source from around the community. They include, but not limited to, schools, churches, the government, profit-generating organizations and agencies, and the general public. They are not expected to be funded by an individual or family. Solicitation of funds is entirely legal.

Unlike private foundations, they conduct their programs as they see fit. Private foundations don’t. Their programs are delegated to other charitable foundations. For a public organization to qualify, more than a third of its donations should come from the public sources, and the support should amount to at least 10 percent of the total support.

It is hard to tell whether an organization is considered charitable by international standards just by looking at its name and the kind of activities it engages in. The most effective way is by checking their exempt letter. It’s only the International Revenue Service that issues it.